China Seeks to Assure Workers of Stability

HONG KONG - The Chinese government is seeking to reassure workers of their rights, a move activists say highlights Beijing's concern that possible labor unrest could cause disruptions to social stability.

The numbers also indicate that inflation and rising consumer prices have slowed - a key goal of leaders worried about the needs of hundreds of millions of middle and lower class workers.

Wealth disparity

But there is one economic indicator that continues to be a major concern for officials trying to maintain social stability: wealth disparity. The main economic indicator of the wealth gap - a measurement known as the gini coefficient - has not been released by authorities in more than a decade.

Premier Wen Jiabao recently visited bus drivers and sanitation workers in Beijing to reassure them of his commitment to worker rights. The visits did not occur by chance, says Geoffrey Crothall of the Hong Kong-based China Labor Bulletin.

"These two groups, over the last two or three years, have been at the forefront of labor activism in China. They’re the groups, apart from factory workers, who are most likely to go on strike. I’m sure it’s no coincidence [Wen] picked those two groups to give his support - saying these workers should be more respected and better valued in society," said Crothall.

China's 220 million migrant laborers, known disparagingly as waidi ren or "outsiders," continue to work long hours in poor conditions.

In an effort to preserve worker harmony, the government has encouraged salary increases among the lowest paid in society. The National Bureau of Statistics reported last week that rural migrant workers saw average pay gains of 21 percent in 2011. In Shanghai, the minimum wage has risen 14 percent on the year. Similar rises are being implemented in the Pearl River Delta region, China’s industrial heartland.

More expectations

However, unlike their parents, blue-collar workers today desire more than just a monthly pay check, observes Alexandra Harney, author of The China Price - the True Cost of Chinese Competitive Advantage.

"Workers expectations have risen; for their lives, for their jobs," she said. "They are looking for experiences, but also to build careers. And one of the persistent fears I hear when I talk to workers in factories is that they find their jobs really boring; that they don’t really have many other options."

Workers have made other gains beyond improved wages, for instance they are increasingly comfortable asserting their legal rights under legislation, including the 2008 Labor Contract Law. Ken DeWoskin, director of the Deloitte China Research and Insight Center, believes those glaring disparities in the distribution of wealth add considerably to working class woes.

"They see cars that cost more money than their families have ever earned in their entire lives," he said. "There’s a sense of potential but also of frustration if they’re earning minimum wage, to have so much luxury and so much wealth in their face all the time. I think there’s a crisis in China of conspicuous consumption."

The hukou system

That dissatisfaction is compounded by China’s long-standing hukou system, which prevents migrant workers accessing a full range of social services - including health and schooling for their children - outside their home provinces.

The working class also bears the brunt of still widespread official corruption. Last week, four people died when a government office in Yunnan province was bombed. The main suspect is reportedly a woman angered by local officials who requisitioned her land to sell to developers at a vast profit.

Despite some improvements in worker rights, data gathered by the China Labor Bulletin reveal a higher incidence of strikes in China these last two months than at any time since it began daily monitoring of worker unrest in 2010.

Lessons from Japan, South Korea

Professor Karel Williams of Manchester University Business School argues China needs to look to the economic models implemented by Japan and South Korea, not just to grow the skills and prosperity of its workforce, but to move the country to the next phase of its development.

"We have a future where China’s competitive advantage is eroded by rising wages and rising exchange rates. It has to stop being a low-wage payer and build major corporates with R&D capabilities and the ability to produce branded goods," said Williams.

Historically, China has shown great elasticity in coping with disparities in wealth, says DeWoskin, and China’s laborers are not likely catalysts for the type of dissent sweeping the Middle East.

"In China, dramatic change generally happens because an alternate power center arises under an alternate leader. Then you have a competition between leaders. Much of what we are seeing politically today is less a result of an ideological struggle and a popular uprising than it is the working-out of great difficulties between various factions in the government," said DeWoskin.

China's once-a-decade transition of power occurs later this year during the Communist Party's 18th National Congress. In the months leading up to the leadership handover, officials are likely to be highly sensitive to labor unrest and its affect on the country's stability.